The Red and Black

Originally posted by

Edwin

"For one thing, having too many credit cards can actually damage your credit score. If you're worried about your credit rating, making utility, rent and car payments on time also builds your credit, and you have to do those things anyway."

I must make a note that this comment is almost entirely false.

Having too many credit cards does not ever hurt your FICO credit scores, which are the most commonly used scores.

Unfortunately, making utility and rent payments almost never improve your credit scores, or even show up on your credit reports.

The only true part of the statement is that making car payments on time will improve your credit.

You should visit annualcreditreport.com to view your reports (don't pay for the scores there), and visit myfico.com to purchase your real classic FICO scores.

The rest of the story is ok. Not going into debt unnecessarily is good.

When you apply for secured loans, e.g., for a car or for a home, one factor the bank considers is the percent of available credit that you are using and the amount of credit you have available. They do this because they don't want to be in a situation where they make a loan to someone who decides they want to go on a spending spree and they use all of their available credit.

The fact is, it is good for your credit history to have one or two credit cards open, that are paid on time, but too much (or too many) certainly aren't good.

Also, making utility and cable payments on time is important. Have you noticed they request your social security number when you sign up? They're aren't doing that because it is fun . . . they pull your credit report (and that appears on your report), and, if I remember correctly, I have seen Charter on my credit report, just like a credit card, indicating I'm in good standing. Moreover, even if it doesn't "help," if you go into collections for something your credit report certainly can be affected.